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Gold firms as equities sink; strong dollar caps gains

Published 2019-05-23, 08:23 a/m
© Reuters.  Gold firms as equities sink; strong dollar caps gains
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* Patience on interest rates to last 'for some time' - Fed minutes

* SPDR Gold holdings down nearly 7% so far this year

* Platinum hits 3-month low

By Brijesh Patel

May 23 (Reuters) - Gold prices firmed on Thursday, supported by a slide in equity markets amid fresh trade tensions, but a strong dollar kept a lid on gains as investors flocked to the safe-haven U.S. currency.

Spot gold XAU= was up 0.4% at $1,278.32 per ounce by 1213 GMT, after falling to its lowest since May 3 on Tuesday at $1,268.97.

U.S. gold futures GCv1 were 0.3% higher at $1,277.60 an ounce.

"We have the higher dollar and lower Chinese yuan pressuring gold. At the same time, yields are a bit lower and equity markets are down (supporting gold)," said ABN AMRO (AS:ABNd) analyst Georgette Boele.

"Gold is not really a safe-haven asset at the moment. There are more offseting factors right now. Apparently there is no real strong directional move in gold at these levels," she added.

World shares were in the red as concerns grew that the China-U.S. trade conflict was fast turning into a technology cold war between the world's two largest economies. MKTS/GLOB

The White House is considering Huawei-like sanctions on Chinese video surveillance firm Hikvision over the country's treatment of its Uighur Muslim minority, a person briefed on the matter said on Wednesday. the broad risk-off sentiment, bids for bullion were limited by the dollar index .DXY climbing to a one-month high as economic and political uncertainties swept through Europe and Asia, weighing on most other major currencies. USD/

Meanwhile, U.S. Federal Reserve officials at their last meeting agreed that their current patient approach to setting monetary policy could remain in place "for some time," a further sign policymakers see little need to adjust rates. reiterating officials' wait-and-see approach amid a raft of global uncertainties may cool rate cut hopes," Ilya Spivak, senior currency strategist with DailyFx, said.

Lower interest rates decrease the opportunity cost of holding non-yielding bullion and weigh on the dollar, making gold cheaper for investors holding other currencies.

The sentiment was reflected in holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, which have declined nearly 7% so far this year.

SPDR holdings edged 0.1% lower to 738.81 tonnes on Wednesday. GOL/ETF

Among other precious metals, silver XAG= rose 0.4% to $14.50 per ounce, while palladium XPD= edged 0.1% higher to $1,315.25.

Platinum XPT= fell 0.4% to $795.50 an ounce, after touching its lowest level since Feb. 15 at $791 earlier in the session.

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